DEFENSE LOGISTICS AGENCY HEADQUARTERS

 8725 JOHN J. KINGMAN ROAD

 FORT BELVOIR, VIRGINIA 22060-6221

May 03, 2019

MEMORANDUM FOR SUPPLY PROCESS REVIEW COMMITTEE (PRC) MEMBERS

SUBJECT: Approved Defense Logistics Management Standards (DLMS) Change (ADC) 1323 

Receipt Reversal Use and Expansion of Reason for Reversal Codes in Support of 

DLA Disposition Services (Supply)

The attached change to DLM 4000.25, Defense Logistics Management Standards, is 

approved for implementation. The Enterprise Business Standards Office (EBSO) will post the 

updated DLMS Implementation Conventions (IC) to the Web at 

https://www.dla.mil/HQ/InformationOperations/DLMS/elibrary/Transformats/140_997/.

within 10 days from the above date

We are forwarding the attached approved change to DLM 4000.25, Defense Logistics 

Management Standards for implementation. 

Addressees may direct questions to Ms. Tonja Daniels-Carter, Supply Team, email: 

EBSO.Supply@dla.mil. Others must contact their designated Supply PRC representative 

available at https://www.dla.mil/HQ/InformationOperations/DLMS/allpoc/.

 HEIDI M. DAVEREDE

 Director

Enterprise Business Standards Office

Attachment

cc: 

ODASD(Logistics)
Attachment, ADC 1323

Page 1

Attachment to ADC 1323 

Receipt Reversal Use and Expansion of Reason for Reversal Codes in 

Support of DLA Disposition Services

1. ORIGINATING SERVICE/AGENCY AND POC INFORMATION:

a. Technical POC: Tonja Daniels-Carter, Enterprise Business Standards Office 

(EBSO), Tonja.Daniels-Carter@dla.mil, 269-961-5227

b. Functional POC: Christopher Floyd, DLA Disposition Services, 

Christopher.Floyd@dla.mil 269-961-7055

2. FUNCTIONAL AREA LOGISTICS AND TRANSACTION CHANGES: 

a. Primary/Secondary Functional Area: Receiving DLA Disposition Services

b. Primary/Secondary Functional Process: Supply/Inventory

c. Logistics and Transaction Changes (Check All That Apply): 

 Category  Category  Category

x Billing x Physical Inventory Contract Admin

x Discrepancies / Deficiencies x MILSTRAP DoDAAD

Serialization x MILSTRIP MAPAD

Small Arms/Light Weapons MRA LMARS

pRFID x Disposition x DLM Publications

GFP DOD BRAC

3. REFERENCES:

a. Defense Logistics Manual (DLM) 4000.25, Defense Logistics Management Standards 

(DLMS), Volume 2, Chapter 7 Inventory Adjustments; Chapter 13, Materiel Receipt; Chapter 

16, Disposition Services; and Chapter 17, Supply Discrepancy Reporting 

b. Defense Logistics Manual DLM 4000.25, Volume 2 Appendix 7.32 Reason for 

Reversal Codes

c. Defense Logistics Manual DLM 4000.25, Volume 2 Appendix 7.28 Supply 

Discrepancy Report Relevant Data Elements

d. Defense Logistics Manual DLM 4000.25, Volume 2, Chapter 7, Table C7.T1 
Attachment, ADC 1323

Page 2

e. Approved DLMS Change (ADC) 459, DLMS Transactions, Discrepancy Codes, SDR 

Type/Disposition Services Type Codes and Associated Procedures to support SDRs under RBI. 

4. APPROVED CHANGE(S)

a. Brief Overview of Change: This change updates DLA Disposition Services and 

Component procedures to authorize use of the receipt reversals process in response to an 

incorrect receipt or in support of a supply discrepancy report (SDR) after receipt (Reference 

3.c.). The authorized reason for reversal codes are identified in DLM 4000.25 Volume 2, 

Appendix 7.32 (Reference 3.d.). The reason for reversal codes will also provide an audit trail for 

the resolution of discrepant receipts when using reversal codes. DLA Disposition Services will 

follow standard SDR processes when the receipt reversal occurs after induction and STOW, also 

known as “SDR After Receipt”.

b. This change will authorize DLA Disposition Services to follow standard inventory 

adjustments and all adjustment reason codes identified in DLM 4000.25 Volume 2, C7.T1. 

(Reference 3.b.). At the time of this change, DLA Disposition Services is restricted to use of the 

DLMS 947I (legacy DIC D8A and D9A) Physical Inventory Adjustment transaction (gain or loss 

disclosed as a result of physical count of stock, single adjustment).

c. Background:

(1) DLA Disposition Services is requesting authorization to conduct receipt 

reversals allowing standardized processes to align with DLMS procedures and interoperability 

across multiple domains. At the present time, DLA Disposition Services is using the DLMS 

947I (legacy DIC D9A) to correct receiving issues, which results in an inventory loss. The 

current process is posting erroneous losses due to systemic limitations presenting an auditability 

concern. Implementation of reason for reversal codes in receipt reversals will mitigate this 

incorrect use of physical inventory adjustments.

(2) DLA Disposition Services ownership for all field offices and inventory is 

identified as Routing Identifier Code (RIC) S9D. During the receipt process, there are 

circumstances where an item passes the receiving identification inspection, or kind, count, and 

condition (KCC), however; the item is later identified as an unauthorized item. The 

identification of unauthorized materiel may occur even after the materiel is in location. The 

current method DLA Disposition Services is using to remove inventory off record due to 

unauthorized receipt or from an SDR after receipt is accomplished by submitting a loss via

DLMS 947I (legacy DIC D9A) transaction. In support of this change, DLA Disposition 

Services and field offices will implement a new reason for reversal code to identify receipt 

reversals due to an incorrect receipt or in support of a supply discrepancy report (SDR) after 

receipt during the receipt reversal process. Additionally, creating Reason for Reversal Code D, 

to identify SDRs after receipt, will allow Disposition Services to remove the disposal turn-in 

document number (DTID) from their accountable records without creating unnecessary 

inventory losses. 

(3) This change documents procedures and authorizes DLA Disposition 

Services to use receipt reversal due to an erroneously processed receipt, using the appropriate 
Attachment, ADC 1323

Page 3

reason for reversal codes, and will allow DLA Disposition Services to follow standard quantity 

or status adjustment reason codes for all legacy DICs supporting the DLMS 947I transactions. 

DLA Disposition coordinated this approach to comply with auditability standards and to follow 

existing procedures and processes.

d. Approved Change in Detail:

(1) Authorize DLA Disposition Services Field Offices to use DLMS 947I/ 

Legacy DIC’s D8B, D9B, D8C, D9C, DAC, D8D, D9D, DAD, D8E, D9E, D8F, D9F, D9G, 

D9H, D8J,D9J, D8K, D9K, D8S, D9S, DAS, D8Z, D9Z, D8A and D9A Inventory Adjustment 

transactions to record gain and losses as necessary. This change authorizes use of adjustment 

reason codes identified in DLM 4000.25 Volume 2, Table C7.T1, allowing standardized 

processing and provide Disposition Services the capability of posting transactions correctly. 

The systemic restrictions of using legacy D8A/D9A Inventory Adjustments currently precludes

DLA Disposition Services from posting correct adjustments and adjustment reason codes.

(2) Implement the receipt reversal process for DLA Disposition Services Field 

Offices to remove unauthorized materiel via DLMS 527R Receipt with Reason for Reversal 

Codes T and D. The receipt reversal transactions will allow Disposition Services Field Offices

to remove the DTID from the record for the entire quantity input during the receipt process

without affecting their accountable records. In the event of erroneous input or correction during 

the receipt process, DLA Disposition Services will follow standard DLMS 947I Inventory 

Adjustments with appropriate status adjustment reason codes on the DLMS 947I or Legacy 

DICs.

(3) Prior to DLA Disposition Services Accountable Property Systems of Record 

(APSR) triggering the DLMS 527R Receipt Reversal with Reason for Reversal Code D, 

Disposition Services will be required to transmit an SDR via DLMS 842A/W transaction to the 

generating customer using Discrepancy Report Document Type Code D, Disposition Services 

SDR Type Code T (DLA Disposition Services receipts from generating turn-in), SDR 

Requested Action Code 3C (Receiving activity not authorized to accept property (pick-up by 

original owner required) (Disposition Services use only). For DLA Disposition Services, the 

SDR type code is also referred to as the Disposition Services Sub-Type Code.

(4) Once the originating generator picks the non-accepted property, DLA 

Disposition Services will update the original SDR (Disposition Services SDR Sub Type Code 

T) (DLA Disposition Services receipts from generating turn–in), with SDR Requested Action 

Code 3B (Discrepancy reported for corrective action and trend analysis. No reply required). 

DLA Disposition Services Field Site will also annotate in the remarks section of the SDR the 

date the materiel was picked up by the generator. Using the SDR Requested Action Code 3B 

will close out the original SDR created with Action Code 3C. Failure of DLA Disposition 

Services to send the SDR Action Codes in this order will result in SDRs that remain open, 

adversely impacting metrics and possibly resulting in an audit gap.

(5) After the SDR process, DLA Disposition Services will then trigger the 

DLMS 527R Receipt using Reason for Reversal Code D (SDR after receipt). This will allow 

the discrepant materiel to remain in location and on record at the Disposition Services Field Site
Attachment, ADC 1323

Page 4

until the discrepant materiel has been picked up by the originating generating customer and the 

SDR is closed out. The receipt reversal should be the last step to this process. 

(6) Revise DLMS 4000.25 Volume 2, Chapter 16 procedures, update DLMS 

Volume 2, Appendix 7.32, and update Inventory Adjustments in support of DLA Disposition 

Services Field Offices. Establish a new Reason for Reversal Code D for SDR After Receipt and 

update procedures to allow DLA Disposition Services to utilize the receipt reversal process and 

reason for reversal codes. (Reason for reversal code addition and revisions are shown below in 

red bold italics.) 

e. Revisions to DLM 4000.25 Manuals:

(1) Add Code D to DLMS Volume 2, Appendix 7.32 as shown:

AP7.32 APPENDIX 7.32, REASON FOR REVERSAL CODE 

CODE NAME/DEFINITION APPLICABLE 

TRANSACTION EXPLANATION

D Reversal of Receipt 

– SDR After Receipt

527R Receipt/ 

D4_/D6_

Reversal of receipt reported due to 

supply discrepancy report (SDR) after 

receipt

(2) Revise DLMS Volume 2, Chapter 16, (C16.7.4.2.4) to identify Inventory 

Adjustments other than the DLMS 947I, Type Transaction Code NU and Status Adjustment 

Reason Code BR and BS.

(3) Revise DLMS Volume 2, Chapter 16, (C16.7.7.4) to identify DLA 

Disposition Services using Receipt Reversals. 

(4) Update DLM 4000.25, Volume 2, Chapter 16, (C16.8.1.) Outgoing SDR. 

f. Approved Transaction Flow:

(1) The DLMS 947I will flow from Disposition Services DSS to DAAS, which 

will be routed to EBS.

(2) The DLMS 527R Receipt Reversal will be evoked from the SDR after 

receipt process in DSS. Standard receipt/receipt reversal and SDR transaction flows apply.

g. Alternatives: There are no alternatives for this change. 
Attachment, ADC 1323

Page 5

5. REASON FOR CHANGE:

a. The current process of handling inventory adjustments for DLA Disposition Services 

does not capture accurate and standard adjustment reason codes required to support their 

business, misrepresenting reasons for the inventory action and does not provide the full 

capabilities identified under Adjustment Reason Codes in DLMS Volume 2, Table C7.T1. 

b. Currently, DLA Disposition Services and their APSR is not processing receipt 

reversals, resulting in erroneous losses due to limitations of system capabilities. The use of the 

receipt reversal and reason for reversal codes by DLA Disposition Services and Field Offices 

will serve as supporting documentation and evidential matter to further justify the reversal. This 

process will also provide succinct metrics for ADRs after receipts. 

6. ADVANTAGES AND DISADVANTAGES:

a. Advantages: 

(1) Provides an efficient approach for supporting adjustment reason codes that 

DLA Disposition Services can apply consistently across all sites. 

(2) Provides accurate transactional data in supporting more concise reporting 

and metrics for DLA Disposition Services Senior Management, DLA Disposition Services and 

Disposition Services Field Offices. 

(3) Provides an audit trail for receipt reversals in correlation to SDR processes 

opposed to the DLMS 947I (Legacy D9_). 

b. Disadvantages: None identified. 

7. ASSUMPTIONS USED OR WILL BE USED IN THE CHANGE OR NEW 

DEVELOPMENT:

a. Use of DLMS 947I inventory adjustments with appropriate Status Adjustment Reason 

Codes on the DLMS 947I identified in DLMS Volume 2, Table C7.T1. 

http://www.dla.mil/Portals/104/Documents/DLMS/Manuals/DLM/V2/0107-v2c7.docx

b. Use of receipt reversal and new reason for reversal codes to support DLA Disposition 

Services identified in DLMS Volume 2, Appendix 7.32.

http://www.dla.mil/Portals/104/Documents/DLMS/Manuals/DLM/V2/0207.00-v2a7.docx

8. ADDITIONAL COMMENTS TO CONSIDER:

a. Implementing this change allows DLA Disposition Services to use DLMS 947I and 

Status Adjustment Codes identified in DLMS Volume 2, Table C7.T1. This will support audit 

concerns and provide accurate metrics within the logistical pipeline and reporting data.
Attachment, ADC 1323

Page 6

b. Implementation of this change supports DLA Disposition Services and DLA 

Disposition Services Field Offices to accurately utilize receipt reversal transactions and reason 

for reversal codes identified in DLMS Volume 2 Appendix 7.32 Reason for Reversal Code.

9. ADDITIONAL FUNCTIONAL REQUIREMENTS: None Identified

10. ESTIMATED TIME LINE/IMPLEMENTATION TARGET: Upon approval of ADC 

1323, DLA Disposition Services DSS and EBS will start working this change. Approximate 

implementation date is April 2020.

11. ESTIMATED SAVINGS/COST AVOIDANCE ASSOCIATED WITH 

IMPLEMENTATION OF THIS CHANGE: This ADC is required to meet audit requirements: 

CAP P2S_Q_2962 titled "Inappropriate Physical Inventory Adjustments in DSS". Calculation

is comprised of 540 mandatory adjustments for FY17 with 467 of them being inappropriate 

adjustments. 467/540 = 86.5% of DLA Disposition Services inventory adjustments result due to 

system limitations for inventory adjustments. The cost savings results in an average of 18 hours 

per package at a rate of $49.37 per hour -49.37*18*467 = $415.004.22 in savings.

12. IMPACT: 

a. New DLMS Data Elements: Reason for Reversal Code D will be created to support 

receipt reversal from an SDR Process. This will be added to the DLMS 527R, RRC qualifier.

b. Changes to DLMS Data Elements: None Identified.

c. Automated Information Systems (AIS):

(1) Implement reason for reversal codes on the DLMS 527R Receipt 

(1BR02/020 Transaction Type Code D4).

(2) Modify DSS to allow all Status Adjustment Reason Codes for the DLMS 

947I transaction, Legacy D8_/D9_. 

(3) Modify EBS to accept all Status Adjustment Reason Codes for the DLMS 

947I transactions, Legacy D8_/D9_. 

(4) Modify DSS and EBS to support receipt reversals for Disposition Services. 

d. Defense Automatic Addressing System (DAAS): Update DAAS maps for Reason 

for Reversal Code D on the DLMS 527R.

e. Non-DLM 4000.25 Series Publications:

(1) DOD Components may need to update internal Standard Operating 

Procedures (SOP) and other published inventory and receipt guidance.

(2) DoDM 4160.21, Volume 1, Section 12.b titled “Errors After Acceptance” 

will require updating to add 4000.25, Volume 2, Chapter 16, C16.7.4.1.2.4. as referenced.
Attachment, ADC 1323

Page 7

13. Proposed DLMS Change (PDC) 1323 Staffing Response/Comment Resolution

Originator Response/Comment Disposition

1. Army No Response Provided Noted.

2. Air Force Concur without Comment Noted.

3. Marine Corps Concur without Comment Noted.

4. DLA Concur with Comment:

I see a reference to RIC S9D on page 3. I’m under the impression the RIC is a legacy element. 

From the perspective of the “new” EWM warehousing module, we may benefit from a 

reference to the DoDAAC in lieu of the RIC or simply avoiding the owner RIC in the

documentation. I do see in 4.d.1. that there is an authorization for DLA Disposition Services 

to now begin to use multiple types of DLMS 947I legacy DICs, which is fine except DSS will 

not comply with most of them. Hopefully this would be hashed out in the requirements if at 

some point in the future Disposition Services wished to generate these types of inventory 

adjustments to the owner of the materiel. DSS will happily perform the following types of 

DLMS 947I with adequate requirements for each scenario: D8A/D9A: Gain or loss caused by 

physical count of stock (Reason AA)D8B/D9B: Gain or loss caused by accounting error not 

subject to correction by reversing original transaction (Reason AB)D8C/D9C: Gain or loss 

caused by condition transfer (Reason AC)D8D/D9D: Gain or loss caused by purpose change 

(Reason AD)D8E/D9E: Gain or loss caused by logistical transfer of ownership (Reason 

AK)D8F/D9F: Gain or loss caused by capitalization (Reason AL)D8J/D9J: Gain or loss from 

a re-identification caused by initial misidentification (Reason AE)D8K/D9K: Gain or loss 

from a catalog change – Unit of issue (Reason AN) or stock number (Reason AF)D8S/D9S: 

Gain or loss resulting from an ownership transfer (users of conventional ammunition system) 

(Reason AG)D8Z/D9Z: Gain or loss resulting for ‘other’ (Reason AH)

Red values are not something I believe that the business owner needs, we do not have a way 

to do today, and we would need very adequate justification on each of these process’s 

expectations. I do not want Disp Services personnel and business owners to believe that the 

presence of these values in the ADC verbiage means that they now have the ability to perform 

all of these without adequate requirements being provided to the J6 development group for 

that logic to be built into the system even for each of the values that are not red. I believe this 

needs to be addressed before the ADC is published. Overall, I do agree that the extra reason 

for reversal code is beneficial for the business in its transactional communications for this 

subject until the point where the movement to standard processes is realistic for the Disp 

Services EBS group. I do foresee issues when we move this into EWM, as the new system 

will want a mixture of one or more standard elements within SAP to represent this new code

in the receipt transactions. Hopefully with EBSO and Disposition Services, we can glean from 

one or more standard codes how to do this same TYPE of communication to map the new 

receipt values to EBS IDoc in DAAS.

EBSO Response:

At the present time, transactions are using the RIC. Upon rollout of EWM, if there are 

additional changes that will be submitted using the DoDAAC in lieu of the RIC these 

concerns will be addressed. The PDC for inventory adjustments is in support of DLA 

Disposition Services RFC submitted in ECRT DOF-C18-0001 New Inventory Adjustment 

Transactions. The POC is Christopher Floyd.

Noted.

5. NAVSUP Concur without Comment Noted.

6. USTRANSCOM Concur without Comment Noted.

7. DAAS Concur without Comment Noted.
Enclosure 1, ADC 1323

Page 1

Enclosure 1, Defense Logistics Manual (DLM) Revisions 

Changes are identified by bold red italics and double strike-through text. 

Revise DLM 4000.25, Defense Logistics Management Standards, Volume 2, Chapter 

16, as shown. Update paragraph numbering as necessary. 

[Preceding text not shown]

C16.7.4.2.4. Adjustment Reason Codes and DLMS 947I Inventory 

Adjustment use for DLA Disposition Services. Inventory adjustments take place via DLMS 

947I transaction which encompasses increases, decreases, or dual adjustments. This relates 

to MILSTRAP legacy DICs D8_ (increase), D9_ (decrease), or dual adjustment represented 

as DAC/DAD/DAS respectively. Inventory adjustments are further broken down by the 

DLMS 947I detail segment (2/W1901/0200) Quantity or Status Adjustment Reason Code. 

The quantity or status adjustment reason codes correlate to the 3rd position of the MILSTRAP 

legacy DICs D8_/D9_ or DAC/DAS as identified in Table C7.T1 in DLM 4000.25, Volume 2, 

Chapter 7. DLA Disposition Services will follow the Status Adjustment Reason codes and 

explanation identified under C7.T1, which have corresponding Legacy DICs associated for 

clarity until sunset of the legacy accountable property system of record.

[Intervening text not shown]

C16.7.7.4 Reversal of Incorrect Receipt Transactions for DLA Disposition 

Services. Receiving activities may use the DLMS 527R Receipt transaction (Legacy DIC 

D4_/D6_) to reverse incorrect receipt transactions. The Receipt reversal transaction will use 

reason for reversal codes identified in DLM 4000.25 Volume 2, Appendix 7.32, Reason for 

Reversal Code. For receipt reversals using Reason for Reversal Code D to identify SDR After 

Receipt, DLA Disposition Services Field Sites will first trigger the SDR using SDR Action 

Code 3C, followed by e SDR with Action Code of 3B. This will allow the discrepant materiel 

to remain in location and on record at the Disposition Services Field Office until the 

discrepant materiel has been picked up by the originating generating customer. .The receipt 

reversal transaction will be the last step to the process. See C16.8.1 and C16.8.1.2 for 

additional information.

[Preceding text not shown]

C16.8.1. Outgoing SDR. During the receiving process, if the DLA 

Disposition Services Field Office identifies a supply discrepancy, an SDR will be generated from 

the field office system using DLMS 842A/W transaction to the generating customer using 

Discrepancy Report Document Type Code D in conjunction with the appropriate SDR 

Disposition Services sub type code to distinguish the source of discrepant shipment (generating 

activity turn-In = T, DLA Distribution Center = B, and Redistribution between field offices = E, 

SDR Requested Action Type 3C. Once the originating generator picks the non-accepted 

property, DLA Disposition Services will update the original SDR (Disposition Services SDR 

Sub Type Code T) with SDR Requested Action Code 3B. DLA Disposition Services Field Site 

will also annotate in the remarks section of the SDR the date the materiel was picked up by the 

generator. Using the SDR Requested Action Code 3B will close out the original SDR created 
Enclosure 1, ADC 1323

Page 2

with SDR Requested Action Code 3C. Failure of DLA Disposition Services to send the SDR

Action Codes in this order will result in SDRs that remain open, adversely impacting metrics 

and possibly resulting in an audit 

(Intervening text not shown) 

C16.8.1.2. Action Codes. The DLA Disposition Services Field Office will 

indicate the applicable action taken or requested on the SDR. When the generator turns in 

property that cannot be accepted by the field office, the field office will prepare an SDR using 

SDR Requested Action Code 3C, indicating Receiving activity not authorized to accept property 

(pick-up by original owner required) (Disposition Services use only). pick-up of unauthorized 

or unacceptable property is required. Once the originator picks the non-accepted property, 

DLA Disposition Services will update the original (Disposition Services SDR Sub Type Code 

T) (DLA Disposition Services receipts from generating turn–in), with SDR Requested Action 

Code 3B (Discrepancy reported for corrective action and trend analysis. No reply required). 

DLA Disposition Services Field Office will also annotate in the remarks section of the SDR 

the date the materiel was picked up by the originator. Using the SDR Requested Action Code 

of 3B will close out the original SDR created with Action Code 3C. 
Enclosure 2, ADC 1323

Page 1

Enclosure 2, Update to Defense Logistics Management Standards Data Elements

# Location DLMS 527R Receipt Reason

1. DLMS

Introductor

y Notes

Add ADC 1323 to DLMS Introductory Notes:

- ADC 1323, Receipt Reversal Use and Expansion 

of Reason for Reversal Codes in Support of DLA 

Disposition Services

Identifies 

DLMS Change 

included in 

DLMS IC.

2. 2/LQ01/130 Add new DLMS Note 4 to existing qualifier RRC:

RRC Receipt Reversal Code

DLMS Note:

1. Use for the Reason for Reversal Code in receipt 

transactions.

2. By DLMS enhancement, DLA storage activities 

must cite the Reason for Reversal Code on receipt

reversals associated with an SDR directing reversal of 

a receipt reported to the wrong owner. Refer to

ADC 1273 and ADC 1323.

3. Code RRC (Reason for Reversal Code) is a 

migration code. A code maintenance request was 

approved in Version 5050.

4. Use in support of DLA Disposition Services to 

identify an SDR after receipt for receipt 

reversals. The values identified in Appendix 7.32 

for the reason for reversal of the receipt will be 

conveyed in 2/LQ02/130.

New requirement 

supports full audit trail 

in support of DLA 

Disposition Services 

to authorize use of 

Receipt Reversals.